Which of the Following Is True About Typical Real Estate

question 9

Multiple Choice

Which of the following is true about typical real estate investment (unlevered, at the direct property level) and inflation risk?

• A) Real estate investment appreciation returns do not generally keep pace with inflation in the long run, but real estate investment provides a hedge against inflation risk in that unexpected changes in inflation tend to be positively correlated with changes in property value in the short to medium term.
• B) Real estate investment appreciation returns generally at least equal the inflation rate in the long run, but real estate does not provide a good hedge against inflation risk in that unexpected changes in inflation do not tend to be positively correlated with changes in property value in the short to medium term.
• C) Real estate investment appreciation returns generally at least equal the inflation rate in the long run, and real estate investment provides a hedge against inflation risk in that unexpected changes in inflation tend to be positively correlated with changes in property value in the short to medium term.
• D) Real estate investment appreciation returns do not generally keep pace with inflation in the long run, and real estate does not provide a good hedge against inflation risk in that unexpected changes in inflation do not tend to be positively correlated with changes in property value in the short to medium term.

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A situation where the quantity of a good or service demanded equals the quantity supplied, leading to a stable market price.

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